Regions show slight improvement says CBI research

Firms are predicting a modest pick-up in business in eight out of nine English regions after spending most of the year struggling against a global economic slowdown, the CBI has said.

According to the CBI's twice-yearly survey of the regional economy, co-published by the CBI and the government's regional development agencies (RDAs), the overall business situation will improve over the next six months, albeit from a low base.

The survey - covering 3,000 firms from all sectors in the nine English RDA areas – indicated that confidence was strongest in the south-west and Midlands, but much less positive in the south-east, London and east of England where the downturn is hitting hardest. The east of England was the only region where a majority of firms thought conditions would worsen.

The shift in mood appeared to have been triggered by signs of improvement in domestic orders and expectations of increases in export demand, says the CBI.

Overall export orders continued declining during the past year, with London particularly badly affected. But companies were more confident about the future with no region anticipating a significant decline in exports over the next 12 months.

Employment is expected to improve with a majority of firms planning to take on people over the next year, but the survey found that many firms plan to fill existing posts rather than create new ones – as indicated by a fall in the expected number of vacancies.

Graham Hall, chairman of chairman for the English regional development agencies, said: "This survey emphasises the need for regional development agencies to deliver long-term, sustainable and diverse economies which can withstand the impact of global uncertainties.

"Different efforts will be needed to provide long-term support for indigenous industries and manufacturers - which still account for a fifth of the nation's wealth - while countering the short-term impact on financial services and business support services."

Doug Godden, CBI Head of Economic Analysis, said: "We can be cautiously optimistic about the long-term outlook, but there is clearly a long way to go before we reach the end of the tunnel. It remains to be seen whether the improvement in export conditions will materialise in the near future. We have had one too many false dawns in recent months."

(GMcG)